The decline deepened on Thursday. Only 29% of the Nasdaq 100 stocks remain in a short term up trend, down from over 60% at the beginning of December. 32% of the Nasdaq 100 stocks advanced, along with 34% of the S&P 500 stocks and 40% of the Dow 30 stocks. Thursday was the 7th day of the QQQQ down trend (D-7). Fewer than one half of the Nasdaq 100 stocks closed higher on Thursday than they did seven days ago when I first detected this down trend. Only 31% of the stocks that hit a new high 10 days earlier closed higher on Thursday than on the day they hit their high. Only 3% of the stocks that have doubled in the past year hit a high on Thursday, although there were 90 new highs and only 35 lows in my universe of 4,000 stocks. So, if it is not the year’s leaders that are climbing, what stocks hit new highs today? The largest sectors were gold mining stocks (KGC, GG, GLG, AEM, GFI, AU, WTZ, NEM, IAG) and closed end funds specializing in bonds and dividend income (PMF, EVT, MUC, EIM, EIV, BLE, BFK, PMX). These accounted for about 20% of all new highs on Thursday. If 2006 brings a substantial decline, gold and dividend producing stocks may be the place to seek gains. Only 22% of stocks are within 5% of a new high. I have close sell stops on my few long positions and am also short the QQQQ’s. The QQQQ is only .02 above its 10 week average. A small decline on Friday would end the 8 weeks of consecutive closes above this important moving average. I find that most of my gains from longs have come during periods when the QQQQ remains above its rising 10 week average………..
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